BS: Base metals up on positive Chinese, euro zone data
Base metals traded on a positive note on Thursday due to favourable manufacturing data from China and the euro zone, raising thereby hopes for a boost in their consumption going forward.
Copper moved up by 1.44% to $7,340, lead and zinc followed suit to settle with a gain of 0.34% and 0.28% on the London Metal Exchange (LME) respectively. Aluminium moved up in tandem to gain 0.27% from previous close.
Positive growth in economy gives a potential boost in investment on infrastructure which ultimately translates into higher base metals consumption. Being one of the largest consumers, infrastructure is the key for base meals price movement across the world.
“After moving broadly within a narrow range for a while, base metals moved in a positive territory on Thursday supported by positive Chinese economic data. A positive sentiment emerged after similar data released by euro zone and US economies which gave an indication of a turnaround in their economies,” said Dharmesh Bhatia, an analyst with Kotak Commodities Services Ltd.
Favorable manufacturing data from China and the euro zone raised hopes of recovery in the world markets. Copper rose by around 1.5 percent in today’s trade. The metal touched an intraday high of $7389 and hovered around $7383.25. Marginal decline in inventories of the base metals was seen except for lead. Owing to this, the gain in LME lead prices was the least. On the MCX, depreciation in the rupee supported an additional upside in the prices.
The HSBC flash manufacturing Purchasing Managers Index (PMI), an indicator of new factory orders, in China hit a four-month high of 50.1 in the month from a final reading of 47.7 in July, moving above the 50 threshold that demarcates expansion of activity from contraction. This indicates that the key manufacturing sector recovered strongly in August.
Apparently, the government of China has announced a series of targeted measures to support the slowing economy, including scrapping taxes for small firms, offering more help for ailing exporters and boosting investment in urban infrastructure and railways resulting into higher consumption of base metals.
Data compiled by the Angle Broking showed that the French Flash Manufacturing Purchasing Managers' Index (PMI) remained unchanged at 49.7-mark in August. German Flash Manufacturing PMI rose by 1.3 points to 52-level in August from 50.7- mark in July.
German Flash Services PMI gained by 1.1 points to 52.4- mark in August when compared to 51.3-level a month ago. European Flash Manufacturing PMI increased by 1 point to 51.3-mark in August with respect to 50.3-level in July.
European Flash Services PMI rose by 1.2 points to 51-level in current month as compared to 49.8-mark in prior month. This also indicates base metals consumption to remain firm going forward.
Reena Rohit, Chief Manager (non-agri commodities and currencies), forecast base metals to trade higher in near future.
Spot gold prices traded on a positive note and gained around 0.2% in early Thursday trade in futures market on the back of upbeat global market sentiments.
However, sharp upside in prices was capped as a result of decline in SPDR gold holdings coupled with strength in the dollar index. In the Indian markets, depreciation in the rupee supported prices.
Standard gold, despite positive trend, moved a marginal 0.21% down to close at Zaveri Bazaar at Rs 31,440 per 10 grams. Silver moved up by 0.87% to settle at Rs 51960 a kg.
